Tuesday, July 13, 2010

More burdens on small business means less small businesses
New requirements will have millions more tax forms pouring into the IRS

WASHINGTON, DC—A full forty million taxpayers, twenty-six million of which are sole proprietors will be met with a new challenge when filing their federal taxes come 2012. The new regulations mandate that taxpayers who receive income via a business provide a 1099 Form to any vendor who supplies more than $600 worth of goods and/or services.

In a press release written by the Taxpayer Advocate Service, the watchdog group predicts more trouble for small business’ to abide by the new tax rules…..

"The new reporting burden, particularly as it falls on small businesses, may turn out to be disproportionate as compared with any resulting improvement in tax compliance."

The measures are meant to close what the feds deem as a “tax gap” between what businesses and individuals owe and what they pay—traditionally resulting in a $300 billion per year underpayment. The light at the end of the tunnel is the regulations are exempt from debit and credit card purchases; businesses owners aware of this work-around may not be able to exploit it as each credit card purchase costs 2 to 3 percent per transaction. Instead, businesses will reduce the number of vendors they get inventory and supplies from—less business means less private sector growth—negatively hampering any economic recovery.

-- Killswitch Politick

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